Friday, May 21, 2010

Did Britain really need to give millions to the wealthy state of Singapore?


With less than a month to go before the biggest-ever spending cut in the history of Britain, the anger it is sure to provoke will be increased by the fact that the wrong programmes are going to be protected and the wrong people are going to be written cheques.

If we are to shield any spending from the axe, it should surely be that which improves our chances of economic recovery, and stimulates future tax revenues. But no. Forget education or job-creating investment. Only two budgets are sacred: the NHS, and overseas aid.
Let's concentrate on the latter. It is surely a stupid proposition that social services, schools, housing and the rest should take higher-than-necessary cuts in order to protect the untouchable empire of the Department for International Development (DFID).

I do not believe that charity should begin at home. I believe that the plight of sub-Saharan Africa is an affront. What I say is that the kind of charity doled out by the overseas aid budget is often fundamentally ill-directed, or worse.

Looking at the figures I discover that, over the last five years for which data are available, Britain has given £8.7 million in development aid to Singapore, whose gross domestic product per capita is the fourth highest in the world, and 46 per cent higher than our own.

Over the same period, other recipients of British development aid have included Slovenia, Malta, the Czech Republic and Hungary, all highly developed First World countries, fellow members of the EU, and two of whom are even in the euro. In the last year for which figures are available, Britain also gave £380,000 in aid to the enormously wealthy oil sheikhdom of Saudi Arabia.

These are, of course, relatively small sums. Yet DFID also paid £40.2 million last year to the economic superpower that is China, now officially classified by the World Bank as a "middle-income country". Among the items funded were "storytelling projects" to encourage Chinese children to campaign against climate change.

The China aid programme is scheduled to end in 2011. But Britain's commitment to that other Asian titan, India, shows no sign of letting up. Over the past 10 years, even as India's economy has roared into overdrive, British development aid to the country has almost trebled.

In the last year for which full figures were available, 2007/8, it was £312 million (£275 million of it from DFID) – making India, by a very long way, the largest single recipient of British aid. Can it be right that the British taxpayer gives such sums to a nation which can afford its own nuclear weapons?

Of course, India has hundreds of millions of poor people. But it is now so prosperous that it has started a significant overseas aid programme of its own. In the words of MPs on the International Development Select Committee, India also "seems to have become increasingly tired of being cast in the role of aid recipient", refusing most aid and declining all which is conditional on things such as government reform.

The Indian government refuses to allow DFID to work directly with most local charities, insisting that payments be processed through official channels. This, said the MPs, caused a "lack of leverage, difficulties in tracking money trails, and problems in determining outcomes".

The majority of DFID's spending – albeit, at 56 per cent, a rather narrower majority than you'd expect – does go to what are known as the "least developed countries", mostly in Africa. Even here, though, there is a growing consensus that decades of international aid have often actually made things worse. Moses Isooba, of Uganda's Community Development Resource Network, says that "a majority of civil society actors in Africa see aid as a fundamental cause of Africa's deepening poverty". Some of the reasons are fairly clear. Poverty's real parent is not cruel Nature, but bad government. Even perhaps the most famous humanitarian crisis ever, the 1984 Ethiopian famine, was essentially caused by a civil war, rather than drought or crop failures. But aid has often worked against good government, by reducing the need for local politicians to take much notice of their own people.

Less obviously, massive international-aid flows can have hugely destabilising macroeconomic effects, dramatically changing the value of local currencies and affecting prices and incentives.

Of course, aid is complicated. Of course, it sometimes helps. DFID does understand the issues, and one of its key priorities is governance. But it is extremely noticeable how, even as well-meaning Whitehall liberals have poured in the aid, Africans themselves have started to reject it. As the analyst Jonathan Glennie puts it, "it is hard to find a single example of an African NGO that is actively campaigning for aid increases".

The unfortunate truth is that, like those Bob Geldof pop concerts, an awful lot of aid spending is actually for our benefit, not the Third World's. All too often, its main effect is not to help the poor – but to make rich people feel good about themselves.

The aid budget is a totem of our niceness – which is presumably why the Cameron Tory party, ever alert to a symbolic gesture, has decided to protect it. But it's a totem which needs just as much cold, hard examination as any other part of the Government budget.